Ortega, with a vision to fulfill the needs of the customers and being 'flexible' in all its literary sense is now the President of a Corporation with one of the largest distribution networks in the world. 30 Years ago, when the brand started off with a vision to cater to the needs of the customer with the latest fashion at affordable prices, the investment banks refused to finance the corporation stating that the 'model is most likely to fail'. Now, with its presence in more than 50 countries at most of the fashion hubs in the world; Zara is acclaimed to be one of the most innovative brands of the world.
The philosophy of the brand is quiet unusual, a great disbeliever of advertising and promotions, the brand seeks opportunity in every bit of its business uncertainty. Zara operates from La Coruna, Spain in a manner that most of the items are designed and produced at its Head Quarters leaving less than 50% (most of them being shirts and jeans) being outsourced to Asia.
The store manager (at every single store), at the end of the day reports to the head quarters at La Coruna about the collections being sold, stocks being depleted etc., giving the designers all the information about which trend to follow.
An average customer of Zara visits the store about 17 times in an year. The advertising strategy of the Brand is quiet different from its competitors; there is no advertising strategy. It is almost impossible to point out a Billboard or an advertisement of Zara except for some countries in Europe. The absence of an online store also creates an urge for the customer to pay a visit to the nearest Zara store.
The image of the brand is totally influenced by the physical retail stores whose windows are designed by the designers in La Coruna. The price of the items in every store are kept at a minimum and the shelves are replaced with latest items at their earliest making the customers pay more visits to the store. The competitors, namely H&M (Swedish Retailer) and Gap are the only ones that can compete with the fast paced brand.
The reputation of the brand is built strongly not to portray a cheap facade neither an image that is too expensive to be afforded by a middle class worker. Leaving no stone unturned, 1200 styles are produced annually leaving all the competition behind.
Not only midde-aged people want to buy Zara's clothes but young people also go shopping at Zara's stores frequently. One reason is that Zara is riding two of the winning retail trends - being in facshion and low prices. Zara concentrates on three wining factors: Short lead time (it will lead to have more fashionable clothes); Smaller quantities per style (Scarce supply) and More styles during a year (More choice, more chances of hitting it right).
ReplyDeleteIt is very interesting that Zara has been expanding their business without advertisement. I recognized again that the advertisement is not only way to build companies' image and reputation. Companies tend to rely on advertisement to increase their sales and achieve higher reputation. However, they can invest their revenues in developing new products and opening new shops if they don't use the money for advertisement. We should keep in mind that there are cases that insufficiency of stock and advertising can conversely lead to increase sales.
ReplyDeletei think Zara is doing very well in fashion industry. its very hard to believe that Zara doesn't spend money on advertisement, instead, they save the money on R&D department; especially in fashion industry, ZARA needs to catch up the latest trend on designed clothes and accessory in order to control their own production line at a lower cost. As a result, the money ZARA save on AD can be return to customers while customers can spend less but get the products they wants.
ReplyDeleteI think the concept of advertising is highly misunderstood in today's world. Advertising is not all about creating print ads or tv ads but if you dig deeper in it, every customer is advertising for the brand he/she buys. Its about advertising and not making other's feel that it is some sort of an advertisement.
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